Nothing is so permanent as a temporary government program

Democracies don't naturally extend government programs. Pressure groups and bureaucrats do.

By , Guest blogger

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    A man dressed in a suit and hat with Union Jack flag designs poses while promoting a shop in Picadilly Circus in London in April. Repairing Britain's public finances could take a generation, according to a leading academic think tank. One reason: Temporary government programs take on a life of their own.
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Milton Friedman used to say that nothing was so permanent as a temporary government programme. He was right: Britain's income tax was brought in as a temporary measure to help fight the war against Napoleon (at six pence in the pound on incomes over £60), and it's still with us. They say (can it still be true?) that Bismarck introduced a tax on champagne corks to fund the fleet; the fleet's now at the bottom of the ocean, but the tax remains.

Friedman might also have said (but didn't, at least in so many words) that nothing grows quicker than a government programme, too. Indeed, government initiatives generally grow much faster than the national income, which is why so many of them are in funding crisis today. Our anti-poverty programmes, for example, are larger than they have ever been before, despite the fact that real, abject poverty is in fact a thing of the past. About 90% of UK households have telephones, microwaves, and CD players, around 80% have mobile phones and satellite TV, 65% have computers and internet, 60% a tumble drier (nearly everyone has a washing machine). My grannie never even dreamed of such luxuries.

Likewise, we are all healthier and living longer – a man aged 65 can expect to live over 17 years more, a woman 20 years more – yet our spending on the National Health Service is higher than ever in history. And despite the fact that we are all increasingly healthier, our spending on disability benefits is higher than it has ever been, too.

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How can this happen? Well, I used to think it was just a product of democracy. I'm not suggesting we ditch democracy as a bad job, but it does tend to produce profligacy in government. Politicians have every incentive to promise us greater and greater benefits today, and put off paying for them until tomorrow, shuffling the cost on to a minority (usually 'the rich', whoever they are) or on to our children, and our children's children. That is a sure recipe for living beyond our means, at least until it all blows up because it is no longer affordable.

But there are other factors at work too. The first is the influence of pressure groups. Groups representing the elderly, or disabled, for example, have a hugely concentrated interest in campaigning for more and more generous benefits to their own groups. The benefits are focused on their small number, but the costs are spread among all taxpayers – the poor along with the rich, in actual fact. They hardly notice the extra pound or two here, another pound or two here. But it all adds up, until people find they have to work from January to July just to pay their taxes.

Another factor is the officials who administer these programmes. Their incentive is to make themselves indispensible, and so guarantee their careers and salaries, by making such schemes more and more generous, applicable to more and more people – and, of course, more and more complicated so that more and more people like them are needed to sort it out and run it. There comes a time when we need to strip out the complexity of these programmes, and limit them and focus them on the truly needy. Something tells me that time is long overdue.

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